With AdMob, Google seeks mobile-ad advantage
When the long-expected development of smartphones and handheld devices into primary computers reaches maturity, Google wants to make sure it occupies just as strong a position on the small screen as it does on the big one.
Google set the stage for that future Monday when it announced a $750 million all-stock deal to acquire AdMob, which is considered one of the strongest ad network providers for the mobile-computing world. It's a familiar strategy; just as Google bought DoubleClick in 2007 to blend search ad expertise with display ad expertise, so it plans to add AdMob's network of partners to its own mobile search ad efforts.
For all the work Google does in other areas--Google Apps, Android, Google Voice--advertising has always been, and will likely remain, its most important source of cash. It dominates the most lucrative segment of online advertising (search) and wants to expand its efforts in display advertising as well with a revamped DoubleClick Ad Exchange and increased efforts to court the major advertisers of the world.
But unlike the PC-based Internet, the mobile Internet-advertising business is still very small and very fragmented, with dozens of companies claiming to play a leading role. AdMob founder and CEO Omar Hamoui said he had no idea how much market share his company had in the business of providing mobile ads to Web site publishers, although AdMob is considered by outsiders to be one of the strongest companies in this area due to its work with ad units for iPhone applications.
Google's AdMob deal is about blending the respective advertising strengths of the two companies in a fast-growing market.
(Credit: Google)Few doubt the staying power of mobile computing, however. Even with mobile advertising accounting for just a fraction of overall online advertising in 2009 ($416 million out of a total online spend of $24 billion according to eMarketer figures quoted by Google), AdMob has been cash-flow positive for about a year as advertisers show increasing interest in trying out mobile ads on smartphones like the iPhone and Android-based devices.
Google said it thought getting AdMob's 140-person team inside its company was "a pretty unique opportunity," said Vic Gundotra, vice president of engineering at Google, in an interview following the announcement of the deal. Gundotra and Hamoui both cited the cultural fits between the two companies as helping to streamline a deal; San Mateo, Calif.-based AdMob counts three Google veterans among the 10 executives listed on its management page.
It's not clear yet how Google will integrate AdMob into its existing structure. Google already operates DoubleClick Mobile, an ad delivery service that allows publishers to sell mobile ads directly to advertisers through a variety of ad networks, including AdMob's. What it doesn't have is its own display ad network with the reach and heft of AdMob's 15,000 and growing name-brand advertisers, which allows mobile publishers to essentially outsource their ad sales.
AdMob's success with iPhone ad sales has gotten it to this point.
(Credit: AdMob)It's also not clear whether AdMob will now become "the" ad network for DoubleClick Mobile customers, but that might exclude a lot of business: Google lists its own AdSense, the MBrand and Decktrade networks from Millennial Media, and AdMob as just some of the ad networks if offers for DoubleClick Mobile customers.
In addition, Hamoui said AdMob would continue to sell ads across many different types of phones, rather than focusing on Google's Android. The whole reason AdMob has grown to the level it has was because it was able to separate its technology from specific phones like the iPhone or Android, which gives advertisers a much broader reach than if the ad network focused on any one phone, he said.
Google is now positioned to offer a one-stop shopping experience for companies interested in online advertising, combining search and display ad possibilities on both regular Web sites and mobile sites and applications. As has been the case for so many Google products and initiatives this year, that will likely raise an eyebrow among federal regulators.
As such, Google said while it doesn't expect to encounter significant regulatory issues with the AdMob purchase, "closer scrutiny has been one consequence of our success. On that basis, we wouldn't be surprised if there were some regulatory review before the deal closes." Google said it hoped to wrap up the deal "in the next several months."
Google took great pains Monday to point out how small a deal this was in the grand scheme of the advertising market. It created a Web site devoted to the deal where it quoted competitors in support of its point that mobile-ad budgets are tiny at the moment compared to the overall amount of money spent on online ads.
But Google's willingness to cough up $750 million in stock--making this its third-largest acquisition once it's finalized--shows just how important it thinks this market will become over the next decade.
When asked how quickly Google might see a return on this deal, Gundotra emphasized the future possibilities over short-term financial concerns.
"Getting that group of talented people into our company is an unbelievable return," he said. "It's likely lead to products and innovations we haven't even thought of yet."
Tom Krazit writes about the ever-expanding world of Internet search, including Google, Yahoo, online advertising, and portals, as well as the evolution of mobile computing. He has written about traditional PC companies, chip manufacturers, and mobile computers, spending the last three years covering Apple. E-mail Tom. 
I think he was referring to the pie chart
i think they are referring to texts you recieve from advertisers, not actually ads placed in the texts you recieve from people you know
if you ever buy those ringtones and crap off of commercials or in magazines where you send some number or word to another short number, you will be more likely to start recieving a bunch of these types of text based ads which try to get you to buy more crap
you probably get more of these ads if you use texting to vote for things on TV shows etc
otherwise cellphone numbers are private and you are unlikely to have ever recieved one of these.. atleast in the US that is
No way those types of ads will last...they're way too intrusive, like pop-ups. Targeted advertising is clearly the way to go...
And Random Walk, I was referring to the pie chart. :)
So I will be looking very closely at the Nokia N900 (Maemo) and Windows Mobile 7 phones when they arrive. But anyone who chooses to run chrome or safari instead of firefox or opera is a fool. IBM is still known as big blue but Google should be called big brother because of their mission to destroy privacy, collate personal information and use it send targeted ads to individuals.
after the hit i got by installing Chrome and the ads that started to follow me even in my dreams. and even after uninstalling chrome, the services chrome adds to your PC cant be uninstalled by running the uninstaller so the ads kept on flooding my desktop,i reformated my PC and i replaced google search with Bing which is really awesome and much better specially when searching for images and videos.
and replaced google docs with zoho..and now i am a happy PC user :D , after all who needs this nightmare in his life .!
- by FF2009 November 10, 2009 4:21 AM PST
- And can anyone explain why Google Chrome has no ad blocking extensions?
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(11 Comments)Having an Adblock for Chrome means loss of revenue for Google. They make money making you watch adds. That's why you will never see an Adblock from Google.
Just be thankful we have alternatives out there. > Firefox + Adblock.